Finance Minister Chrystia Freeland has confirmed that the increase in the capital gains tax will take effect as planned on June 25, 2024. Despite calls for a six-month delay, this measure, announced in the April 16 federal budget, will not be postponed.

Impact on Taxpayers

This increase will particularly affect businesses and individuals realizing significant capital gains. The taxable portion of capital gains will rise from 50% to 66% for businesses. For individuals, the increase will apply to gains exceeding $250,000, while gains below this threshold will remain taxed at 50%.

Arguments and Reactions

During her testimony before the Senate National Finance Committee, Ms. Freeland justified the decision by stating that the government had given taxpayers sufficient time to adjust. She emphasized that, traditionally, budget measures take effect immediately upon the budget's release.

Senator Clément Gignac proposed a six-month delay, noting that in the 1980s, the Mulroney government provided a similar notice before a comparable tax increase. This proposal aimed to give taxpayers more time to plan their finances, particularly those investing in residential properties.

Consequences for Investors

This increase could penalize modest-income investors, as highlighted by Senator Claude Carignan. He illustrated his point with the example of Roch and Rose, owners of a triplex in Ahuntsic, who use this investment as a pension fund. Minister Freeland responded by citing historical precedents and emphasizing tax fairness.

Conclusion

The increase in the capital gains tax is a significant measure that will impact many taxpayers, especially those with real estate investments. As the debate on tax fairness continues, it is crucial for investors to prepare for these imminent changes.